Indian Government approves USD173 million in fresh funding for Air India

Indian Ministry of Civil Aviation (MoCA) announced (18-Feb-2010) the Indian Government approved a proposal to provide INR8 billion (USD173 million) in fresh equity support ( in two equal monthly installments) to Air India's parent, National Aviation Company of India Limited (NACIL). The infusion had earlier been approved by the Group of Ministers (GoM) and the Indian Ministry of Finance (MoF). The release of funds will be "calibrated to the achievement of milestones laid down by the GoM", which accepted the company’s savings and cost reduction plan of USD413 million (INR19.1 billion) for FY2009/10. NACIL has initiated a multi-pronged turnaround plan which includes the following measures:

Reduction of fleet size from 146 aircraft to 105 by Mar-2011, with 22 aircraft being removed by way of leasing out, return of leased aircraft and sale of aircraft. It has been estimated this will result in annual cost savings of USD43 million on maintenance and inventory cost and USD86 million in fuel consumption and efficiency gains. Future requirements of cockpit, cabin crew and engineers would be reduced, resulting in annual savings of USD64.8 million;

Reduction of positioning flights and six B747 to be taken out of service and replaced by other aircraft will result in savings of USD121.7 million in the current year;

Medium term network strategy by end of Dec-2010 is being developed with the assistance of Simat Helliesen & Eichner that will focus on profitable hub operations, leveraging partners for efficiency, such as the Star Alliance;

You may also be interested in the following articles...

The Australia-India market has experienced rapid growth over the last three years, prompting Australia to lobby for more direct services. Visitor arrivals from India are up 50% since mid-2013, and total passenger traffic between the two countries is up approximately 30%.

Air India launched services to Melbourne and Sydney in 2013 but the Australia-India market is still dominated by Southeast Asian flag carriers. Singapore Airlines has been able to maintain a leading 41% share of the market. Malaysia Airlines also still carries more Australia-India passengers than Air India.

Attracting more nonstop flights from Air India, or the possible launch of nonstop flights to India by Australian carriers, will not be easy despite growing demand. Southeast Asia’s network airlines have a competitive advantage as they serve several gateways in both Australia and India. Southeast Asia’s growing medium/long haul LCCs have also started to compete in the Australia-India market and are well positioned to take a large share of the anticipated growth.